NBC announced Monday that it would enter into a 10-year affiliation with KNTV, Channel 11, in San Jose, thus eliminating KRON Channel 4 from airing NBC programs such as "ER" and "Friends" after December 2001.

The announcement wasn't a complete shock, given that Young Broadcasting, the company that recently bought KRON for $823 million, said Wednesday it would sever ties with NBC - believing the network was putting unreasonable demands into the affiliate renegotiations.

But many industry experts considered that a business bluff and that the two warring factions would come to some agreement in the next two years to keep NBC in San Francisco.

Instead, NBC's deal with Granite Broadcasting, which also owns KBWB Channel 20, marks the first major affiliate defection in San Francisco in decades and could help rewrite the rules of network-affiliate business.

In the past, the networks paid most affiliates to carry programming. NBC reportedly paid KRON $7.5 million a year. Under Monday's agreement, Granite will pay NBC $362 million over nine years.

"We are thrilled to be able to demonstrate how NBC, working with forward-thinking affiliates, can find business models that prepare all of us for the next generation of network broadcasting," said Randy Falco, president of the NBC Television Network.

The deal also includes the possibility of a "San Francisco cable news service" that would combine KNTV news resources with some of NBC's cable holdings including the San Francisco-based NBC Internet.

KNTV is now an ABC affiliate but becomes independent when it ends the affiliation in July.

Much work remains to be done, considering KNTV is licensed to San Jose and does not appear at all in San Francisco.

A deal with AT&T Cable will have to be worked out so that a uniform channel position can be garnered for all Bay Area cable systems and a stronger tower will have to be built so that KNTV's over-the-air signal reaches San Francisco.

Lastly, Young Broadcasting will have to buy an assortment of syndicated programming to fill the

space on Channel 4, and the loss of NBC and its profit-making potential could impact current KRON news employees.

Kevin O'Brien, general manager of KTVU, Channel 2, couldn't believe the terms of the deal - for either side.

"Bob Wright (president and CEO of NBC) has sacrificed network ratings and his distribution process for revenue," O'Brien said. "It's going to be very bad for both of them. That's the history. Everywhere there's been an affiliate switch, there's been trouble."

O'Brien questioned how an independent station could survive having to pay the network so much money for affiliation.

"How is (Don Cornwell, CEO of Granite Broadcasting) going to make money giving 80 percent of his profit to a network? That guy needs to go to Harvard Business School," he said.

In a conference call, Cornwell said KNTV has already received permission from the FCC to double the power of its over-the-air signal and he doesn't think there will be difficulty with the company's "good friends at AT&T Cable" to secure a universal dial position. KNTV is expected to seek Channel 11 for both cable and over-the-air transmission.

Cornwell admitted that "historically there's been a loss of audience" during a station swap, but believed there would be "an awfully good transition to NBC," in part because the network will be airing the Winter Olympics shortly after KNTV gets the affiliation.

KNTV will also be seeking a new market designation from the FCC, as it now serves the Salinas-Monterey area, according to its license.

Despite concerns about profit from industry experts, Cornwell said it "was just a terrific deal for Granite."

He estimated the station would pull in about $45 million in cash the first year of the affiliation, which is less than KRON now earns. &lt;